Nigerian Bonds Yield Rises, Marginal Rates Increase by 1.75%

The average yield on Nigerian government bonds climbed slightly to 19.3% in the secondary market due to thin trading activities that had bearish tone.

The Nigerian fixed income market extended its bearish run last week, with increasing risk aversion for long duration bonds, against the backdrop of a disappointing inflation print in Sept, further increase in one-year Treasury bill auction stop rate. 

Against this backdrop, the benchmark bond yield curve expanded as analysts noted trading activities were relatively on calm note, albeit with bearish tone.

In the secondary market, bondholders have continued to weighed impacts Nigeria’s hot red inflation condition, higher interest rate environment on portfolio returns.

Amidst subdued yield on FGN bonds, there was an increase in marginal rates on reopened bonds in the primary market.  Last week, the Debt Management Office (DMO) conducted its monthly bonds auction, where it reopened two bonds for subscription to investors.

A total of ₦180 billion was offered for the 2029 and 2031 bonds, with subscriptions reaching ₦389.32 billion and allotments at ₦289.60 billion.  The marginal rates for both papers increased significantly by 175 basis points each, analysts said in a note.

DMO re-openings of the 19.30% FGN APR 2029 was priced at 20.75% and 18.50% FGN FEB 2031 saw 1.75% increase in spot rate to 21.74%.

Breakdown showed that total subscription level settled at N389.24 billion, lower than N414.89 billion that investors stake at the previous auction. Eventually, the DMO allotted instruments worth N289.60 billion across the two tenors, resulting in a bid-to-cover ratio of 1.3x.

Post-auction, fixed income securities traders said interest grew in the 2031 and 2033 bonds. Due to the minimal activity in the market on the back of attention shifting auction, the average yield inched higher by 1bp to 19.3%.

In its market update, Cordros Capital Limited told investors that across the benchmark curve, the average yield expanded at the short (+5bps) and long (+4bps) ends.

The yield surge was attributed to investors’ decisions to trim or sell off the JAN-2026 (+10bps) and JUN-2053 (+32bps) bonds, respectively. #Nigerian Bonds Yield Rises, Marginal Rates Increase by 1.75%

Treasury Yield Rises as CBN Hikes Rate on 364-Day Bills